SteelOrbis Shanghai
It is well known that the machine equipment sector is an important steel
consumption domain in
China. According to the official data, the steel demand of the sector under discussion accounts for nearly 25 percent of
China's total steel
consumption. The
consumption of the machine equipment sector, taken together with the
construction sector, makes up nearly 65 percent of the total national steel
consumption. Compared to last year, the growth in steel demand in machine equipment manufacture decreased a little in 2006. Even so, the sector's steel
consumption ratio is still at a high level.
Looking at the overall situation in
China, the development of the machine equipment sector has lagged behind the development of the national economy. In addition, overall levels of technological capability have also lagged behind world levels. This situation means that
China's machine equipment sector is at a competitive disadvantage in relation to the global industry.
Although
China is a world center for the
production of some commodities, it still holds the status only of a world processing center. One of the key reasons for this is that
China hasn't sufficiently mastered the high technology and know-how needed to produce all the important machine equipment varieties. Some international trade figures can give a clearer picture of the situation. In 2005,
China imported total foreign machine equipment with a value of over USD 340 billion i.e., 52 percent of
China's total imports last year. In recent years, most of
China's new
investments in machine equipment have depended on imports. Especially in the oil, chemical, automobile, light fiber, integrated circuit and digital machine tool sectors, on average more than 60 percent of the required machine equipment has had to be imported from other countries.
While
China produces a huge number of commodities for the whole world market, the machines themselves used in the
production process are not made in
China. The
production value of the machine equipment sector is only about 32 percent of the total
production value of the national
manufacturing industry. This figure is nearly five percent behind the level of most developed countries.
In order to effect a change in the present situation,
China's relevant government departments have initiated investigations and research activity regarding practical situations and problems. Based on the latest research reports, in order to improve technological capability and self-sufficiency, the Chinese government is to prepare and issue preferential policies to encourage and help machine equipment manufacturers to focus fully on R&D of important technologies, such as systems design, mold development and design, key parts, etc. Moreover, the state is also to help domestic enterprises to participate in the competitions for international project contracts. This will be another important way to promote the export of
China's machine equipment to the world's markets. Besides, as regards some joint ventures - such as in the automobile sector, for example - the state's desire for an improved home produced/import ratio in the machine equipment sector is also in favor of the development of the domestic manufacturers.
Supported by the state,
China's machine equipment sector is expected to enter a rapid development period in the near future. This trend can be expected to lead to increased steel product demand from steelmakers, in particular from local steelmakers.